Billionaires like Jeff Bezos, Elon Musk and Warren Buffett pay little in income tax compared to their massive wealth — sometimes, even nothing.
A new ProPublica analysis of a trove of IRS documents revealed that the richest 25 Americans pay a tiny fraction of their wealth in taxes.
But even if you use the most conventional yardstick — income — the richest Americans still pay low rates.
The very richest Americans win at the tax game no matter which measure you use. ProPublica has published an article, based on a vast trove of never-before-seen IRS information, that reveals the pittance in taxes the ultrawealthy pay compared with their massive wealth accumulation.
But that trove of IRS data also reveals new information on how little the 25 wealthiest Americans pay in taxes by the most conventional measure: income. Not all are able to minimize their income and avoid taxes; some report very substantial sums. But even then, the data — and a new analysis by ProPublica — shows they still pay strikingly low rates.
On average, they paid 15.8% in personal federal income taxes between 2014 and 2018. They had $86 billion in adjusted gross income and paid $13.6 billion in income taxes in that period.
That’s lower than the rate a single worker making $45,000 a year might pay if you include Medicare and Social Security taxes.
The top tax bracket is 37%, but the 25 richest Americans paid an average of 15.8% on their reported income from 2014 to 2018.
Credit:Source: ProPublica analysis of IRS data
The federal tax system is designed to be progressive: The more money people make, the higher the tax rate they’re supposed to pay. Today, a married couple pays a tax rate of 10% on their first $19,900 in taxable income (after deductions), stepping up to 37% for everything they make above $628,300.
The information published Tuesday shows how billionaires are able to legally reduce their tax burden, highlighting how the American tax system can hit ordinary wage-earners harder than the richest people in the country.
That’s often because the richest Americans tend to have their wealth tied up in stocks and real estate, allowing them to avoid taxes on unrealized profits.
The report comes after President Biden and other Democrats have complained the U.S. tax system is unfair and tilted to benefit corporations and the wealthy.
Among the most assertive on that score is New Jersey Democrat Lisa McCormick, who has called for an increase in top tax rates and a complete reversal of trickle-down economic policies that have resulted in vast inequality and a shift in power and poverty that threatens the republic itself.
"Americans must reverse Reaganomics to restore the American dream," said McCormick. "While this is still the richest and most powerful nation on the planet, our spending priorities have become so perverse that it justifies a revolutionary solution."
There has been a fierce debate in Washington for decades about how much money the wealthy should pay in taxes, but little was known publicly about the tax payments of individual billionaires.
The ProPublica analysis shows that the country’s wealthiest members in recent years were paying a “true tax rate” of just 3.4 percent.
McCormick said voters need to accept responsibility for the government.
"The situation is exactly what we should expect when we allow the political establishment to escape accountability and the solution is for ordinary Americans to rise up to the responsibility of citizenship," said McCormick. "Democrats who are not faithful to the principles that define the Democratic Party and Republicans who are constantly advocating tax cuts that failed to rejuvenate our industrial base deserve to be punished for decades of betrayal."